Midterm 2 (Finance)

Beta Bond Rating Gabby 1.25 AAA Gloria 1.25 AA Gina 0.75 AAA Grace 0.75 AA Who has the highest Cost of Capital (WACC)? [Capital structure and all else being equal] Gabby Gloria Gina Grace

Betas Answer the questions beiow for assets A to D shown in the following table. Asset Beta so B 1.60 - 20 D .90 a. What impact would a 10% increase in the market return be expected to have on each asser's return? b. What impact would a 10% decrease in the market return be expected to have on each asser's return? c. If you were certain that the market retum would increase in the near future, which asset would you prefer? Why? d. If you were certain that the market return would decrease in the near future, which asset would you prefer? Why?

K Capital asset pricing model (CAPM) For the asset shown in the following table, use the capital asset pricing model to find the required return. (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Risk free rate, Re 2% The required return for the asset is (Round to two decimal places) Market return, f 8% CONTE Beta, b 0.2

An investment firm recommends that a client invest in bonds rated​ AAA, A, and B. The average yield on AAA bonds is 4​%, on A bonds 6​%, and on B bonds 11​%. The client wants to invest twice as much in AAA bonds as in B bonds. How much should be invested in each type of bond if the total investment is ​$28,000​, and the investor wants an annual return of ​$1,740 on the three​ investments?       Question content area bottom Part 1 The client should invest ​$enter your response here in AAA​ bonds, ​$enter your response here in A​ bonds, and ​$enter your response here in B bonds

quiz 8-17

Problem 1 Assume you are considering 6 coupon bonds whose investment characteristics are given in the table below: Bond Current Market Price Coupon, % Term to Maturity, years A 94.125 7.82 7 B 99.842 8.25 9 с 106.041 9.14 10 D 95.074 6.86 4 100.893 F 101.221 8.61 9.12 5 8 Using the NPV approach define potential investment strategy in terms of buying/selling these bonds. Compute these bonds' net present values, given the alternative rate of return 7.98%. Problem 2 Using Problem 1 data, calculate yield to maturity of all bonds. Which bonds are quoted at a premium and which bonds are quoted at a discount?

Only typing answer Please explain step by step

Capital asset pricing model (CAPM) For the asset shown in the following table, use the capital asset pricing model to find the required return. (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Risk-free rate, RF 1% The required return for the asset is %. (Round to two decimal places.) C Market return, m 5% Beta, b 0.5

up up B1 = 0.6 B2 = 0.3 down down Two securities, B1 and B2 are trading in the economy and their payoff structure and prices are given in the above. Suppose that annualized continuously compounded interest rate is r, and time to maturity is T. What is the risk-neutral probability of reaching the "up" state, q? O 0.3333 O 0.5003 O 0.6065 O 0.2299 1.

Given a choice between 5-year and 1-year instruments most people would choose 5-year instruments when borrowing and 1-year instruments when lending. Which of the following is a theory consistent with this observation? Select one: O a. Expectations theory O b. Market segmentation theory O. Liquidity preference theory O d. Maturity preference theory

Accounting question

Capital asset pricing model (CAPM) For the asset shown in the following table, use the capital asset pricing model to find the required return. (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Risk-free rate, RF 9% The required return for the asset is %. (Round to two decimal places.) Market return, m 14% Beta, b 1.4

What is the expected return on asset A if the expected return on the market is 8%, the risk-free rate is 4%, and the Beta of asset A is 2? You want to use Capital Asset Pricing Model (CAPM) Group of answer choices A) 12% B) 20% C) 16%

Topic 2: Return measures2. Which of the following investments do you prefer?(a) Purchase a zero-coupon bond, which pays $1000 in ten years, for a price of $550.(b) Invest $550 for ten years in a bank savings account at a guaranteed annual interestrate of 5.5%.1

Capital asset pricing model (CAPM) For the asset shown in the following table, use the capital asset pricing model to find the required return. (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Risk-free rate, RF 5% Market return, m 10% ****** The required return for the asset is%. (Round to two decimal places.) Beta, b 0.6